Speaking at the Temasek Society 30th Anniversary dialogue session on Friday, Mr Lee was quoted as saying that without a strong Singapore Armed Forces (SAF), "there is no economic future" and "there is no security".

Mr Lee said the SAF has done better than he had hoped.

He highlighted the 3rd Generation SAF, which is now technologically advanced, respected and fully capable of meeting Singapore's defence needs.

Mr Lee said national service is also now widely accepted by Singaporeans, adding that this was achieved because the government was prepared to spend on defence needs over many years.

Going forward, Mr Lee said Singapore will continue to invest in the SAF to attract top caliber people with capabilities to handle the complex and uncertain security challenges that the country will encounter in the future.

On one key challenge facing Singapore, Mr Lee said, "The serious problem of a shrinking demography" will "impact not only Singapore's economic future but also its security".

The dialogue themed "Security Challenges for Singapore", was also attended by Defence Minister Ng Eng Hen and President Tony Tan Keng Yam.

Temasek Society is a forum for SAF officers and civilians to discuss strategic and professional military issues.